The Coca-Cola Company has signed letters of intent to refranchise bottling operations that serve a large area of the US.
The transactions include territories in Texas and parts of Oklahoma, New Mexico and Arkansas, which is an area currently known as the Southwest operating unit of Coca-Cola Refreshments.
Under letters of intent, The Coca-Cola Company will contribute the Southwest operating unit, including distribution and production operations, in exchange for a 20% equity stake in a new, privately held entity.
This entity, AC Beverages, will also include all of Arca Continental’s existing beverage businesses in Latin America.
Arca Continental, which is based in Monterrey, Mexico, will continue to be publicly traded on the Mexican Stock Exchange.
Coca-Cola Bottling Company United, based in Birmingham, Alabama, will become a joint-venture partner in the US operations of AC Beverages.
Arca Continental will have the majority stake in this US joint venture, where both companies will work with local teams in a partnership to benefit the important markets in which they participate.
United will acquire from The Coca-Cola Company the majority of its remaining territory in Oklahoma.
It will contribute that territory, along with cash, to its US joint venture with AC Beverages.
United will continue to independently operate all of its other territories, which are outside of its joint venture with AC Beverages.
Separately, Ozarks Coca-Cola Bottling Company of Springfield, has signed a letter of intent to acquire territories owned by The Coca-Cola Company in northwest Arkansas and small areas in Kansas and Oklahoma.
The letters of intent facilitates The Coca-Cola Company to refranchise Company-owned North American bottling territories.
This work is expected to be completed by the end of 2017.
Currently, Arca Continental is the second-largest Coca-Cola bottler in Latin America and the third-largest independent bottler in the world in terms of unit case volume.
The AC Beverages/United joint venture will be based in the United States.
It will become a member of the National Product Supply Group (NPSG).
The NPSG, as previously announced, will administer key activities for member bottlers, including production of cold-fill beverages.
The NPSG is governed by a board comprised of representatives from its current members, which are Coca-Cola North America, Coca-Cola Refreshments, Coca-Cola Bottling Co. Consolidated, Coca-Cola Bottling Company United and Swire Coca-Cola, USA.
The AC Beverages/United joint venture will own 11 cold-fill production facilities, of which nine are in Texas.
The other two facilities are in Oklahoma City and Okmulgee, Okla.
